Backup is arguably the most important service an MSP provides, but it can be undervalued. Because every business needs it, it has become part of what an MSP offers by default.
Advanced options will be available, of course, but some level of backup will be part of any MSP’s offering. This affects how businesses see backup. As long as they have some form of it, the need is satisfied.
Our own research found that three in four MSPs are making a profit from backup. This is good news, but it does mean that one in four are not. Backup is a vital service and should be profitable for every MSP that offers it.
Loss leaders are an acceptable approach for ‘stack them high, sell them low’ retail outlets, but not businesses providing customers with specialised IT support.
Education is critical
There are several ways that MSPs can ensure their backup products are profitable, but they all start with education. For many, backup in their day-to-day life is simple and often automatic. Photos are uploaded to Google and available even if their device is lost.
Everything from emails to Spotify playlists are saved to the cloud for easy retrieval. This can lead people to believe that business backup should work in the same way.
Businesses need to be aware that their backup is more complex. Different service levels carry different costs. For example, disaster recovery typically requires an additional backup, with all the costs that entails. Cyberattack recovery often requires a third backup, isolated and air gapped.
Having both disaster recovery and cyberattack recovery means some costs are tripled. If there is a need for long-term archiving, the limited capacity of on-premises infrastructure means data will need to be tiered into the cloud in order to hold long term copies.
There are also hidden costs borne by the MSP providing the service. For example, licensing costs for both hardware and the entire software stack, including hypervisor, storage software, and more. The cost to power and cool hardware used for backup.
The ongoing costs of managing backup hardware, such as replacing drives and expanding storage. Then there are the costs of maintaining any infrastructure — provisioning, monitoring, patching, and so on.
Just as important as data being backed up is how quickly it can be recovered. All businesses would want as little downtime as possible, but for some this is even more vital. Businesses need to know that backups are working as they should, in the timeframes that they should, so automated recovery testing needs to be part of the deal.
Those providing backup don’t necessarily have to detail every cost, but they need to give their customers a better understanding of what they are paying for, and what makes it more complicated and expensive than their personal experience of backup.
A modular approach
Businesses that understand backup in relation to their specific needs might be happier to spend what they need rather than opting for a default package. However, that means MSPs should offer a range of options and the ability to scale.
From a basic package that gets businesses up and running to a fully featured option with all of the bells and whistles including fast time to recovery, very regular backups and long-term storage.
This modular approach means businesses can get exactly what they want, and MSPs can help maximise revenue in the fairest way possible, letting their customers choose their backup requirements at a fair price point.
MSPs should also use this approach to stand out from competitors. By giving their customers choice and providing education, they are offering more than just simple backup, but a bespoke solution.
One reason backup can end up unprofitable is that MSPs take over a solution chosen by the customer, but this means that the MSP has one more solution to train their staff in and it may not be compatible with their current offerings. Weaning customers off old backup solutions can cut costs and make backup more profitable.
If you can move all of your customers to a solution that can be maintained from a single dashboard and move them to cloud-first backup, this will also cut costs. That could extend to the customer too, if they have been maintaining an on-premise appliance.
No MSP product or service should be provided at a loss.
The work that MSPs do is too valuable and, in the case of backup, vital. Making sure customers understand this is the first step to making sure backup has the respect and profitability it deserves.